GEOTHERMAL RESOURCES in & UKRAINE

November 22, 1996

Prepared by: Bojan Stoyanov Anthony Taylor

Bob Lawrence & Associates, Inc. 424 N. Washington Street Alexandria, VA 22314 TABLE OF CONTENTS

I. Introduction...... 1

II. Structure of the Russian Geothermal Industry, Contacts and Partners, Nomenclature of Tables...... 2

III. Region A, the Caucasus...... 5

IV. Region B, the Coastal Far East...... 6

V. Region C...... 9

VI. Ukraine...... 11

VII. Outlook for Development...... 15

Appendix...... 17

Table 1

Table 2

Table 3

Table 4

Table 5

Table 6

Bibliography INTRODUCTION

This report describes the geothermal resources of the Russian Federation and Ukraine. The name Russian Federation will be used interchangeably with Russia. The term geothermal resources, in this report, is limited to underground/subsurface water fields or hydro-geothermal resources. No reference to hot dry rock (HDR) is made in this report, because the team found no practical use or experimental development of HDR in Russia and Ukraine. Limited theoretical study of HDR is part of the activity of the Earth Science Institute of the Russian Academy of Science and other affiliated institutes.

The currently known geothermal resources of Russia are concentrated in the following two areas (please see map):

A- the and surrounding territory, and

B- the far-eastern part of the Russian Federation.

Considerations of general geological character supported by extensive drilling for crude oil prospecting and extraction along with natural discharge of thermal waters, suggest that the region of Western and Middle and the Sayano-Baikal mountain range might be also rich in geothermal resources. In the body of this report we will refer to this large territory as Region C.

The currently known geothermal resources of Ukraine are believed to be concentrated in two separate areas (please see map): the territory of the Crimea Peninsula and in the Transcarpathian trough -- in the eastern provinces of the country, bordering Romania and the Republic of Slovakia.

Region A is composed of Krasnodarskii Krai1, Stavropolskii Krai, the Republic of Adigea, the Karachaevo-Cherkeskaia Republic, the Republic of Kabardino-Balkariia, the Republic of Northern Osetiia-Alaniia, the Chechen-Ingushet Republic2 and the Republic of Dagestan.

1 According to the Constitution of Dec. 12, 1992, the Russian Federation is composed of the following entities: republics, Krai (regions), Oblast (provinces), Avtonomnaia Oblast (autonomous provinces), and Avtonomnii Okrug (autonomous districts) -- all of which have equal rights in the Federation. 2 At the time of preparation of this report, the process of separation of the Chechen-Ingushet Republic into Chechen Republic and Ingushet Republic had not been concluded. The legal border between the two republics had not been established. Thus it is impossible to determine the location of certain geothermal prospecting sites between the two countries. Therefore, for practical purposes, in the body of this report, where necessary, we will be referring to the territory of the former Chechen-Ingushet Republic, which includes the territory of the Chechen Republic and the territory of the Ingushet Republic.

Geothermal Resources in Russia & Ukraine — BL&A page 1

Region B includes Kamchatskaia Oblast, Sahalinskaia Oblast, Magadanskaia Oblast and the Chukotskii Avtonomnii Okrug.

Region C includes Tiumenskaia Oblast (including the Hanti-Mansiiskii Avtonomnii Okrug and the Iamalo-Nenetskii Avtonomnii Okrug), Tomskaia Oblast, Omskaia Oblast, Novosibirskaia Oblast, Altaiskii Krai, the Republic of Gornii Altai, Kemerovskaia Oblast, Republic Tuva, Republic Hakasiia, Krasnoiarskii Krai (including Taimirskii Avtonomnii Okrug and Evenkiiskii Avtonomnii Okrug), Irkutskaia Oblast (including Ust-Ordinskii Buriatskii Avtonomnii Okrug), Republic of Buriatia and the eastern territories of the Republic of Saha (Yakutia).

Regions A, B and C differ dramatically from each other in their climatic conditions and levels of socio-economic development.

STRUCTURE OF THE RUSSIAN GEOTHERMAL INDUSTRY, CONTACTS AND PARTNERS, NOMENCLATURE OF TABLES

Administrative Structure of the Industry

The Russian geothermal industry is administratively subordinated to two government bodies of ministerial or department level -- The Ministry of Oil and Gas of the Russian Federation and the Committee of Geology and Utilization of the Earth’s Crust of the Russian Federation. This dual subordination has historic reasons dating back over 30 years, which are beyond the scope of this report. An exception occurs when a power plant is involved. Power plants are subordinated to the Energy Ministry.

The major efforts of drilling, prospecting and developing geothermal resources have been performed under the Ministry of Oil and Gas. Research, prospecting and accounting for geothermal resources have been performed under the Committee of Geology.

Contacts and Partners

Among the numerous companies and research centers under the two ministries (one ministry and one committee), the team found contacts with the following institutions most fruitful and beneficial (not ranked in order of preference):

1. All Russian Institute for Hydro-Geology and Engineering Geology,

2. BurGazGeoTerm State Limited Company,

3. Committee of Geology and Utilization of the Earth’s Crust of the Russian Federation,

Geothermal Resources in Russia & Ukraine — BL&A page 2 4. SevKavBurGeotermiia,

5. Institute of Geophysics, The Ukrainian Academy of Science.

The All Russian Institute for Hydro-Geology and Engineering Geology is a leading R & D center on the practical problems and aspects of the utilization of the geothermal energy.

BurGazGeoTerm State Limited Company is by far the largest drilling and prospecting company in Russia. The company was solely responsible for oil and gas drilling on the territory of the entire former . It is an integral part of Gazprom, the largest liquid petroleum gas developer, producer and distributor in the world, with revenues that rank it among the Fortune Top 10 (not 100), according to Fortune magazine itself. BurGazGeoTerm enjoys the cash windfalls from Gazprom and seems the least affected, among the geological and geothermal entities, by the stagnation in the Russian economy. In addition the company has international drilling activity and develops geothermal resources internationally as well (for example in Latin America).

BurGazGeoTerm maintains its own database of the wells, drill sites and geothermal fields it has under development and exploitation. The database includes very detailed information on the geology, the lythology and the energy potential of the sites. We are obliged to the company for sharing a part of that information with us. This information is organized in Tables 2, 4 and 5.

The Committee of Geology and Utilization of the Earth’s Crust of the Russian Federation is broadly responsible for the exploration, development and utilization of all natural resources on the territory of Russia except oil and gas. These broadly defined responsibilities encompass policy making as well as purely commercial activities, including business plan preparation, joint venture establishment and operation, granting of concessions, etc.

SevKavBurGeotermiia, a spin-off of BurGAzGeoTerm and now an independent state owned company, has been involved in the prospecting, development and exploitation of geothermal resources on the territory of Caucasus for more than thirty years. The company, and its management are demonstrating an extremely high level of entrepreneurship and initiative. The management of the company is actively searching for partners and possibilities to increase the output of the current resources and the efficiency of their use. According to the company, approximately 35 % to 50% of the available geothermal resources on the territory of Region A are currently being utilized.

Institute of Geophysics, The Ukrainian Academy of Science, is one of the few entities left on the territory of Ukraine that deal with geothermal energy. It is one of the very few usable contacts on geothermal issues in Ukraine.

Geothermal Resources in Russia & Ukraine — BL&A page 3 Nomenclature of Tables

The information contained in Tables 1 and 3 has been provided by the Committee of Geology and Utilization of the Earth’s Crust of the Russian Federation. Table 1 contains the official opinion of the Committee with respect to the geothermal energy potential of the different parts of the Russian Federation, broken down by major geothermal water fields and by the kind of the resource, i.e. hot water or geothermal steam (steam-water mixture). The shaded part of the table contains sites in Region A, the un-shaded, Region B. The information in Tables 1,2 and 4 may be combined to give the most comprehensive understanding of the capacity and geology of any geothermal site.

Table 3 provides important aggregate information along with important time perspective. Table 3 is the latest word of the Committee of Geology and Utilization of the Earth’s Crust of the Russian Federation on the geothermal energy potential of the country. It contains sites being certified by the GKZ -- the State Commission on Resources, the government body authorized to standardize, approve and classify information on natural resources in Russia. Translation of the working definitions applicable to geothermal resources adopted by GKZ are provided in the Appendix.

The information contained in Tables 2, 4 and 5 has been provided by BurGazGeoTerm. Table 2 provides detailed information on the sites in the Russian Caucasus -- defined as Region A in this report. The sites that are located in Region A but are not accounted for in Table 2 are listed in the footnotes of the table.

The information in Table 4 has also been provided by the Geological Department of BurGazGeoTerm. This table covers in detail the geothermal sites in Region B -- the Russian Far North-East. The information in this table is a an integral part of an aggregate body of information known as “The Balance of Natural Recourses of the Russian Federation”. Therefore, this table provides a comprehensive and exhaustive list of all geothermal water fields in Region B, including those that are no longer under the developmental responsibility of BurGazGeoTerm. However, the information in Table 4 is a lot richer in detail and therefore more valuable in its own way than the aggregate numbers provided in, for example, Table 1 and 3.

Table 5 provides information on the two sites that were under exploitation by BurGazGeoTerm on the territory of Ukraine. Other geothermal sites do exist on the territory of Ukraine, but no systematic information, approved by the Ukrainian equivalent of the GKZ, on those sites is available. The information provided in Table 6, although reliable, does not carry a seal of state approval.

Geothermal Resources in Russia & Ukraine — BL&A page 4 REGION A, THE CAUCASUS

Geomorphologically, the Caucasus region is divided into the Precaucasian Platform, the Greater Caucasus, Transcaucasia and Lesser Caucasus. Only the Precaucasian Platform and the eastern slopes of the Greater Caucasus remained in the territory of the Russian federation after the disintegration of the former Soviet Union (USSR).

The Precaucasian Platform and the eastern slopes of the Greater Caucasus are administratively divided among the following republics and krai -- regions:

1. Krasnodarskii Krai 2. Stavropolskii Krai 3. Republic Adigeia 4. Karachaevo-Cherkeskaia Republic 5. Republic of Kabardino-Balkaria 6. Republic of Northern Osetiia-Alaniia 7. Chechen-Ingushet Republic 8. Republic of Dagestan all of which are members with equal rights in the Russian Federation. Currently there are no known geothermal resources or geological prospecting operations in the of the Republic of Northern Osetiia-Alaniia.

The Precaucasian Platform hosts two artesian water basins that cover a total area of 150,000 square kilometers: the Azov - Kubanskii basin to the north and the Tersko - Kumskii basin to the south. These two artesian basins are separated by the Stavropole dome. The two basins are piedmont type and have external water recharging pressure forming sources of piedmont type in the eastern slopes of the Greater Caucasus.

Extensive drilling in the region for crude oil prospecting and exploitation has provided ample data on the water-bearing horizons. Generally these are the sedimentary deposits of the Lower Cretaceous and the Neogene deposits. The Apsheron Neogene water-bearing formation is one of the largest in the eastern Precaucasia. It almost reaches the coastal line of , where it produces geothermal waters with temperatures of 46 to 1000 C at the Kizliarskoe site and Chervlennie Buruni near the town of Uzno-Suhokumsk . The deposit strata at this site reach a depth of over 1000 meters and are up to 700 meters thick.

The Chokrakian water-bearing formation is a Neogene deposit with industrial significance as a source of geothermal water. It is situated in the eastern collar of the Caucasus range transcending into Precaucasia. Water-charging occurs on the eastern slopes of the Caucasus though Chokrakian monoclinals. Reaching significant depths through highly permeable sandstone interlayered with clay, the water acquires high pressure and temperatures of over 1000 C .

Geothermal Resources in Russia & Ukraine — BL&A page 5 Another major Neogene deposit with industrial significance is the Karaganian water-bearing formation. It extends as a band, 50 kilometers wide, along the slopes of Caucasus mountain. These slopes, especially to the north charge the water-bearing strata of the formation in the eastern and the southern parts of Precaucasia in the Azov - Kubanskii basin. The sedimentary sandstone is of very high water permeability, reaching a depth of four kilometers and a thickness of 400 meters. Water temperatures vary with depth, with maximum levels of over 1000 C and mineralization in the range of 10 to 20 g/l.

Several of the most significant geothermal water fields in Region A are connected to Chokrakian and the Karaganian Neogene deposit levels: Hankalskoe and Goitinskoe, respectively south and south-east of the town of Grozni, Mahachkalinskoe and Mahachkala-Ternair, Kizliarskoe and Izberbashskoe, just to name a few (for details, please refer to Table 1 and Table 2).

The Pontian-Meotian Neogene deposit horizons of sand, poorly cemented sandstone and siltstone are of very high permeability. These deposit horizons stretch north of the Stavropol dome and into the Azov-Kubanskii sag as well as into the Tersko-Kumskii basin sag. The geothermal water in these strata is of low mineralization. The highest temperatures are 700 C .

The Cretaceous, especially the Lower Cretaceous (Albian, Aptian, Barremian and Cenomanian) formations in southern Precaucasia provide favorable conditions for the formation of geothermal water fields. Although the Lower Cretaceous strata form a belt 10 to 20 kilometers wide along the foothills of the Caucasus range, it is only at the southern end, where thermal water has been associated with them. At Tersko-Galiugaevsoe, in Stavropol Region, at depths of 2600 to 2700 well temperatures of 1600 to 2200 C have been measured.

Details of all of the geothermal water fields and sites in the territory of Caucasus region can be found in Table 1 and Table 2.

REGION B, THE COASTAL FAR EAST

1. Kamchatskaia Oblast

The Kamchatka Peninsula is a part of the Asian Alaska sector of the Circum-Pacific Cenozoic volcanic belt. The geothermal resources in Kamchatka are of volcanic origin. Tectonic activity on the peninsula is determined by the northeastern dislocations. These dislocations are the reason for the volcanic activity and the associated geothermal phenomena. Most of the significant geothermal systems on the territory of the peninsula are located along the Eastern Kamchatka volcanic zone. The formation of this zone is related to the formation of graben-synclinal structures -- large faults in the northeastern plate. These graben-synclinal structures are limited by the regional fractures of very large amplitudes ( up to 1000 to 1500 meters) or by a series of

Geothermal Resources in Russia & Ukraine — BL&A page 6 scalariform faults of medium amplitude, filled with Quaternary volcanic and volcanic-sedimentary rocks (Erlich et al.).

The following paragraphs provide a brief geomorphological description of the most important geothermal complexes on the territory of the Kamchatka peninsula. The text should be reviewed along with Table 4 which provides detailed numerical information on all commercially viable geothermal sites in Kamchatka as per the Committee of Geology and Utilization of the Earth’s Crust of the Russian Federation.

Paratunskoe is one of the most important geothermal water fields in Kamchatka. It includes the Paratunskoe, Bolshe-Bannoe, Karimchinskoe, Nachikinskoe and some other sites. The Paratunskoe region is part of the south-eastern outskirts of the inner volcanic arc of the Kamchatka Peninsula. The region includes the basins of the Plotnikov, Karimchini, Bannoi and Paratunka rivers. The most important geological-tectonic structures are the metamorphic zone of the Ganalskii ridge, Nachikinskaia block folding zone, the Verhnekarimchinskaia volcanic zone, the Nizhnekarimchinskaia volcanic zone, the Tolmachevski area of regional basalt vocalism, the northern collar of the Gorelogo volcano, the Paratunka trough and the Nachikinskaia trough.

Without doubt the Pauzhetka geothermal complex is the best known geothermal water field in the territory of the Russian Federation and the former Soviet Union in general. A water/steam mixture of geothermal origin has been sufficient to power the first Russian Experimental Geothermal Power Plant with a capacity of 5MW continuously for thirty years now. It is important to point out however that the installed capacity of the plant is 11 MW. The Pauzhetka geothermal complex is located in the boundary between two structure-facies zones: the West Kamchatka and the Central Kamchatka, as defined by G. M. Vlasov and V. A. Iarmiuliuk. The Pauzhetka geothermal complex is also an integral part of the following volcanoes as a part of the southern end of the Eastern-Kamchatka volcanic range: the Zheltovskii, the Ilinskii, the Kambalnii, Koshelevskii and Mashkovtsov volcanoes.

Mutnovskoe geothermal complex is another commercial source of water/steam mixture with electricity generation potential at the current level of technology. Mutnovskoe geothermal complex is located 70 kilometers south of the town of Petropavlovsk-Kamchatskii, in a region of rather intensive and diverse volcanic activity. The complex is named after the complex massif of the Mutnovskii volcano, developed through several different geologic periods. This massif provides for the most powerful fumarole fields in the Kamchatka peninsula. Two separate characteristic formations of the Mutnovskoe complex are the Gorelii volcano with an active strata-volcano within the caldera at the top of the cone, and the disintegrated Zhirovskii volcano with thermal activity within the eroded crater. A specific, narrow depression, 3 to 10 kilometers wide, extends in the sub-meridianal direction, overlapping the peripheries of the above described volcanic structures from the Mutnovskii to the Viliuchinskii volcanoes. The depression is overlaid with a dense set of tectonic faults with multiple demonstrations of aerial volcanic activity such as scoria cones, dykes and extrusions of different age and composition. This graben-like structure is

Geothermal Resources in Russia & Ukraine — BL&A page 7 referred to as the Northern Mutnovskii volcanic zone ( E. A. Vakin, et al.) Morphologically, this area is a plateau, tilted eastwards and down-cutted by the beds of the Zhirovaia, Falshivaia and Mutnovskaia rivers. The volcano formations rise high, more than one kilometer above the plateau with latitude of 700 to 800 meters.

2. Sakhalinskaia Oblast

Sakhalinskaia Oblast consists strictly of island territory -- that of the large Sahalin island and the group of the Kurile islands that stretches from the southern tip of Kamchatka peninsula to the northern end of the Hokkaido island of Japan.

2.1. Sakhalin Island

Several artesian basins have been discovered on the territory of Sahalin island during crude oil prospecting. The most significant include Severo-Shalinskoe, Tatarskii and Susuniskii artesian basins. The best studied is the Severo-Sahalinskii artesian basin covering some 22,000 square kilometers. The water bearing strata are Neogene sand, sandstone and siltstones. Water temperatures range from 600 to 970 C at Tungur at a depth of 3300 meters. Mineralization ranges from 3 g/l to 20 g/l.

The Tatarskii artesian basin covers some 8,000 square kilometers. Although Neocene and Paleocene deposits form the largest part of the basin, the highest water temperature, 1280 C, has been measured at the Krasnogorskaia site in Upper Miocene deposits at a depth of 2.9 kilometers.

The Susunaiskii basin covers some 1,500 square kilometers. It is formed in Neogene sedimentary environment with a thickness of three kilometers. Water temperatures in the range of 700 C have been measured at a depth of 1800 meters, again during crude oil prospecting.

2.2. The Kurile Islands

The Kurile Islands include the following larger islands from north to south: Paramushir, Simushir, Urtup, Irtup and Kunashir. They are part of the same chain of eastern Pacific dislocations as Japan and Kamchatka. Consequently, the same tectonic and volcanic forces cause the geothermal phenomena on these islands. The islands are formed from Neogene volcanic sedimentary deposits broken by a number of major dislocations that focus the thermal activity.

Regardless of the favorable conditions for the existence of geothermal water and steam, due to the small size and the remote location of the islands, very few sites have been explored and rated of commercial significance.

One of them is Goriachii Pliazh. The site is located on the eastern shore of Kunashir island, the one closest to Japan. The geothermal field is located in a narrow coastal stretch, about one

Geothermal Resources in Russia & Ukraine — BL&A page 8 kilometer long and a quarter of a kilometer wide. It is in immediate proximity to the Mendeleev volcano. The geothermal water system is bedded in a fissured Neogene layer of tuffs, sandstone, conglomerates and redeposited volcanic rocks and has total thickness of 570 meters.

Another site with a very promising commercial potential, due to the high enthalpy of the water- steam mixture is Okeanskoe (Kipiashtii), located on the Ohotsk Sea coast of Irtup Island. It is also in close proximity (eight kilometers) to the Town of Kurilsk.

3. Chukotskii Avtonomnii Okrug and Magadanskaia Oblast

Chukotskii Avtonomnii Okrug and Magadanskaia Oblast are part of the vast Russian North-East area. The entire region covers more than 4,000,000 square kilometers and geologically is a Mesozoic fold belt. Both Chukotskii Avtonomnii Okrug and Magadanskaia Oblast are part of the Ohotsko-Chukotskii volcanic belt, which is one of the five major geologic structures of the Russian North-East: the Kolima fold zone, the Iano-Kolima fold zone, the Chukotka fold zone, the Ohotsk fold zone and the Ohotsko-Chukotskii volcanic belt. The two geothermal sites known in the area are both located in the Ohotsko-Chukotskii volcanic belt. These are the Tavatumskoe site in Magadanskaia Oblast and the Lorinskoe site (Kukinskie outflows) in the Chukotka peninsula. Due to the severe climatic conditions, the region is poorly studied.

REGION C

Region C covers the territory between the rivers Lena and , and includes:

Tiumenskaia Oblast (incl. the Hanti-Mansiiskii Avtonomnii Okrug and the Iamalo- Nenetskii Avtonomnii Okrug), Tomskaia Oblast, Omskaia Oblast, Novosibirskaia Oblast, Altaiskii Krai, the Republic of Gornii Altai, Kemerovskaia Oblast, Republic Tuva, Republic Hakasiia, Krasnoiarskii Krai (incl. Taimirskii Avtonomnii Okrug and Evenkiiskii Avtonomnii Okrug), Irkutskaia Oblast (incl. Ust-Ordinskii Buriatskii Avtonomnii Okrug), Republic of Buriatia, and the eastern territories of the Republic of Saha (Yakutia).

Geothermal Resources in Russia & Ukraine — BL&A page 9 From a geophysical viewpoint, Region C includes the West Siberian , the Middle Siberian Highland and the Sayano-Baykal fold range.

1. West Siberian Plain

The Western Siberian Plain hosts one of the world’s largest artesian complexes. The complex was very well studied during extensive exploration and development of crude oil fields. Geothermal waters have been encountered in the Aptian, Albian, Cenomian and Neocomian formations.

The water bearing strata of the Aptian, the Albian and the Cenomian formations consist of sand, sandstone, siltstone and clay with aggregate thickness of about one kilometer. The waters reach 600 C and contain methane and nitrogen gases. Mineralization varies in content and composition from 1 to 75 g/l, sometimes including iodine and bromine. Some examples of drill sites to the south are Koplashevo, Kupino and Ipatovskaia and to the north are Vikulovo and Tara.

The water bearing strata of the Neocomian formations consist of interlayered sandstone, siltstone, clay and argillite, reaching depths of 200 to 1800 meters. The highest water temperatures of 700 to 950 C at bedding were recorded in the Middle Ob River Valley and Toblosk sites where Irtish river merges with the Ob river. At the Tobolsk site, near the town of Tobolsk, the water has sodium chloride mineralization of about 17 g/l and methane gas contamination.

2. Middle Siberian Highland

The Angara-Lena artesian basin is situated in the Irkutsk amphitheater, which itself is a result of the interaction of the wedge-shaped anticlinal nose of the Middle Siberian Highland platform with the Sayano-Baykal fold region. Heavily mineralized brine waters, with up to 500 g/l of dried compound and temperatures of up to 770 C were confined to Ordovician and Cambrian formations.

3. Sayano-Baykal fold range.

The Sayano-Baykal fold range is a result of volcanic activity during tertiary Neogene. The result is a system of consecutive grabens and mountain ranges, the grabens actually replicating large faults in the strata. Lake Baykal occupies the deepest of these grabens. Natural outflows of hot water indicate the existence of geothermal water systems. Two types of such systems are found in the Sayano-Baykal fold range: waters in sedimentary environment and waters in fissures in the fault zones.

No resources with commercial significance have been identified in Region C for the following three reasons:

Geothermal Resources in Russia & Ukraine — BL&A page 10 • although extensive geological prospecting work has been performed in the region, it was primarily focused on the investigation and exploration for crude oil reserves, not geothermal water reserves;

• none of the known geothermal sites offers high temperature resources suitable for electricity production; and

• the region is very sparcely populated and most of the known geothermal water fields are away from urban areas, which limits the usefulness of these geothermal resources.

UKRAINE

The usable hydro-geothermal potential of Ukraine is estimated to be 10,000,000 metric tons crude oil equivalent per year.

The Transcarpathian and the Ciscarpathian depressions, along with the Skifskaia (Scythian) platform, the Dneprovsko-Donetskaia trough and the Donetskoe folding system are considered to be the most promising for geological prospecting operations for geothermal water (V.V. Baibakov, et al). This conclusion is based on the study of thermal flow and the depth of the 1500 C isotermic strata by geophysical methods. The recommendation does not consider the geological prerequisites for existence of subsurface waters.

1. Crimea Peninsula

In the relatively small territory of the Crimea Peninsula, interaction of tectonic regions of completely different structure and time of development has been observed. Almost all major structures of the Earth’s crust are represented here: the southern slope of the ancient East European Platform, part of the Epipaleozoic Scythian plate, a part of the Alpo-Himalayan folding system, represented by the Crimean mega-anticline bordered by the Hindolo-Kubanskii edge sag and a region of the bathipelagic depression of the Black sea, characterized by the typical structure of a pelagic depression.

According to E.A Babinets, from hydro-geological point of view, the Crimea Peninsula, which is a part of the Prichernomoskii (the Black Sea) artesian basin, is subdivided into the following three basins, due to their differences in tectonic structure and hydro-geological characteristics:

• Prisivashskii artesian basin, • Alminskii artesian basin, and • Indolskii artesian basin.

Geothermal Resources in Russia & Ukraine — BL&A page 11

1.1. Prisivashskii (Sivashkii) Artesian Basin

The Prisivashskii (Sivashkii) artesian basin is located between the Ukrainian crystalline massif and the Evpatoria block rise. The northern and the eastern marts of the basin are located in the Ukrainian crystalline massif, while the southern part of the basin is in the area of the Prichernomoskii (the Black Sea) bathipelagic depression.

1.2. Alminskii Artesian Basin

The Alminskii artesian basin is a part of the Alminskii trough.

1.3. Indolskii Artesian Basin

The Indolskii artesian basin is a part of the Indolskii trough.

Characteristics of the water bearing horizons in the sedimentary mantel of the Crimea Peninsula follows. Please, refer to Table 5.

The speed of water penetration of the Paleozoic deposits represented by marbly limestone schists with intercalation of effusive rock ranges from 6 cubic meters per day at the Novoselovskoe site, consisting of three parts: Ilinka, Trudovoe and Sizovka, to 860 cubic meters per day at the Saki site. The chlorine-sodium mineralization ranges from 2 g/l to at the Goncharovka site to 70 g/l at the Krilovskaia site.

Water bearing horizons from the Jurassic period occur at depths of 400 to 3000 meters and are characterized by low holding and filtration capacity. The flow rates of the wells reaching into such horizons range from 0.11 cubic meters per day, at Oktiabrskoi site to 18.4 cubic meters per day at Krasnovskoi site. The chlorine-sodium mineralization ranges from 2.4 g/l to 63.5 g/l.

The water bearing strata from the Cretaceous period are basal sandstone, aeurolites, gritstones and conglomerates. The best water trapping capacity is demonstrated by the basal aleurolite- sandstone bench reaching open porosity of 3% to 29% and perviousness of 987 f/m2 at the Novoselovskoe uplift and the Simferopolskii protrusion. The flow rate of the gushing wells is sometimes higher than 1200 cubic meters per day.

The Upper Cretaceous water-bearing horizons found in limestone-clay formations are characterized by low open porosity of 1-2% to 10-20%, fissure porosity of not more than 1% and fissure perviousness from zero to 183 f/m2. The flow rates range from 0.2 to 532 cubic meters per day at the Kuibishev area to 2600 cubic meters per day at the intensively fissured series of the Krilovskoi area. The mineralization of the Upper Cretaceous water-bearing horizons is 20 to 30 g/l.

Geothermal Resources in Russia & Ukraine — BL&A page 12 The Paleocene water-bearing strata are mostly sandstones, often poorly cemented, and characterized by high open porosity. Such formations are spread throughout the Tarhankut and the Kerchen Peninsulas and in the Sivash area. The flow-rate of the wells sometime reaches very high values -- 2240 cubic meters per day at a gushing well at Medvedovskoi site. The chlorine- sodium mineralization is in the range of 16.7 g/l to 60.8 g/l.

The water trapping properties of the Middle Eocene deposits at the Prisivashe site were thoroughly studied. The average open porosity ranges from 22% to 26% producing a flow-rate at the well of 870 cubic meters per day. The water has chlorine-sodium mineralization of 30 to 50 g/l.

The water bearing horizons in the Maikop series turn out to be the aleurolite and the fine-grained sandstone interlayers. They have low water-trapping capacity of 65 cubic meters per day. Chlorine-sodium mineralization with values of 10 to 65 g/l is typical.

The Severo-Sivashkoe prospecting site is located north-east of the town of Djankoi, near the coastal line of the Asov See.

Novoselskoe geothermal water bed is located opposite from the Severo-Sivashkoe, across the territory of the Crimea Peninsula, near the Black See coast, north of the town of Evpatoria. It consists of three prospecting sites: Ilinka, Trudovoe and Sizovka. The largest and most intensive temperature anomaly has been observed at this geothermal water bed. Its proximity to urban areas enhances its ranking as the most commercially viable geothermal resource of the Crimea Peninsula.

2. Ciscarpathia

2.1. The Ciscarpathian Depression

From a hydro-geological point of view, the Ciscarpathian Depression is a first class, pressurized water-bearing basin. It is sub-divided into two second class water-bearing basins: the Chop- Mukachevskii and Solotvinskii pressurized water-bearing basins. The hydro-geological environment in the Ciscarpathian water-bearing basin is not homogenous. It is not uniform even within the two sub-basins. The mineralization of the geothermal waters of the Chop-Mukachevskii basin vary in quantity and kind from 10 g/l to 300-350 g/l.

2.1.1.

Significant flow-rates (see Table 6) of waters from Paleozoic, Early Miocene and Sarmat deposits have been observed during prospective drillings in the area of the town of Uzgorod, situated in the north-western part of the Ciscarpathian Depression, close to the borders with Romania and the Republic of Slovakia.

Geothermal Resources in Russia & Ukraine — BL&A page 13 The Uzgorod site is characterized, as is the territory of the entire depression, by a block structure of pre-Neogene folding base. Multi-directional tectonic movements of the blocks have resulted in significant variations in the depth of the base. The highest part is the Uzgorod transversal uplift. The roof of the base is located at a depth of less than 1000 meters. Uneven, but sometimes up to hundreds of meters thick, the sedimentary mantle of lower Miocene is a significant structural element of the hydro-geothermal environment of this site. The most productive area proved to be the sandstone water bearing horizon of the adjacent Russko-Komarovskii uplift. The name of the drill-site is Uzgorod - 2T (see Table 6). The mineralization of the water is 16 - 30 g/l. The formation pressure at 1700 m is 167.9 Atm. and at 1300 m, 134.64 Atm. A maximum water temperature of 1080 C was measured at a depth of 1940 m. The discovered hydro-geothermal resources have been determined to have no commercial value and are currently in conservation. The geological and hydro-geological investigation carried out at the site is however considered insufficient to a large extent.

2.1.2.

Some of the drillings in the region of the town of Irshava also demonstrated significant free- flowing hot water. At that site, an anticlinal crypto-diapir fold is to be found under the Neogene mantel. Most promising are the waters in Cretaceous sedimentary environments. Such waters and environments have been discovered by the drillings at Irshava - 2, located in the area of the Danilovo-Nevitskovo abyssal fracture (see Table 6). The water-bearing rock is of fissured type, probably due to the fracture zone. Mineralization is about 189 g/l.

2.1.3.

The hydro-geothermal complex at the Tereblia site (see Table 6) is also of significant interest. The formation is located in the central part of the Solotvinskaia depression. The maximum thickness of the water bearing tuffs is 700 meters. The dip angle of the thrust fault planes of the Cretaceous blocks of the base is between 5-20 deg. The water bearing suites are enveloped between these practically water-impermeable blocks and talabor rock which is also water impermeable. This creates very favorable conditions for the accumulation of geothermal waters. Well Tereblia -6, drilled in the central part of the syncline, reached pressurized water-bearing horizon in the interval between 2009 and 2360 meters. The well is a gushing type, with flow-rates between 500 and 900 cubic meters per day. The pressure at the well head was measured at 1.2 Atm. The pressure at 1767 meters was 217 Atm. Water mineralization is in the range of 138 g/l. Water temperature measured at 2350 meters was 1050 C, and at the well head was 950 C (Tereblia - 6).

The size of the Tereblia water-bearing complex is 15 by 5 km. Assuming the thickness of the water-bearing rock is 300 m. and the porosity of the rock is 10% the accumulated reserves are 3 km3. With a temperature of over 1000 C, the accumulated thermal energy is then 1.5x1018 J (A. A. Andrusenka et.al.).

Geothermal Resources in Russia & Ukraine — BL&A page 14 Among the different sites of the Chop-Mukachevskii and Solotvinskii pressurized water-bearing basins, Uzgorod, Mukachevskii, Irshavskii, Vinogradskii and Beregovskii sites were deemed promising for geologic prospecting for thermal waters. As a result of extensive, but still incomplete, studies carried out in the ‘80s, the Uzgorod site was determined to be of highest priority for commercial utilization of the discovered hydro-geothermal resources. The proximity of the site to the towns of Uzgorod and Chop played a significant role in the estimation of the resources for commercial utilization. The Tereblia hydro-geothermal site received second highest priority with respect to the potential of its geothermal resources.

2.2. The Vigorlat-Gutinskoi Volcanic Range

The Vigorlat-Gutinskoi Volcanic Range is an independent geological and hydro-geological formation. The geothermal waters of the Vigorlat-Gutinskoi Volcanic Range are famous for their qualities as table spring waters. However, due to the small depth of their bedding they are of low temperature and have low energy and therefore commercial potential.

OUTLOOK FOR DEVELOPMENT

Currently the Russian Federation is undergoing uneasy changes on the road to a market economy and democracy. The process of economic readjustment is resulting in severe shrinkage in industrial output. The economy is cash strapped. The government is re-defining not only the state borders but also its own roles and functions within the new Russian society.

In this reality, it is not surprising that geothermal problems have lost some of their priority. However, these problems have not lost their importance.

As indicated to the team by the Director of the Drilling Company, Mr. Boris Nirko, the utilization of geothermal resources in the Caucasus region is only 35% to 50%. The North Caucasus Drilling Company, which is solely responsible for the prospecting and exploitation of all geothermal resources in the territory of the Caucasus region ( Region A), expressed very strong interest in partnering with US and other international wildcatters in two areas: increasing the output of geothermal waters and increasing of the efficiency of their use.

Mr. Postnikov the Head of the Geological Department of BurGazGeoTerm -- the largest national drilling and developing organization -- indicated potential interest in joint efforts with international partners in the development of a new geothermal field -- on the island of Paramushar (one of the Kurile islands). The field is so new that it is not yet included in the national balance of geothermal resources.

Geothermal Resources in Russia & Ukraine — BL&A page 15 Another geothermal site that is being packaged for attracting international partners is the Kusminka site in Stavropolskii Krai. The field offers waters with temperatures of 130 C . The Committee of Geology and Utilization of the Earth’s Crust has prepared a complete business plan.

Another example is the Mutnovka site. In addition to the existing 50 to 60 MW, an additional 70MW of geothermal resources with potential for electricity generation has been identified. A 70 MW geothermal power plant project will be financed by the European Bank for Reconstruction and Development (EBRD). However, the project is still open for investors and for equipment suppliers.

To conclude, regardless of the general problems of the Russian economic environment, the Russian geothermal industry sub-sector offers selected possibilities for promising international cooperation.

Geothermal Resources in Russia & Ukraine — BL&A page 16 APPENDIX

This appendix provides some of the working definitions used by GKZ -- the Russian State Commission on Resources -- that are necessary for the correct understanding and interpretation of the data provided in the body of Tables 1 and 3.

Geothermal reserves are divided into three subtypes:

1. Static reserves are the volume of subsurface water, contained in water-bearing strata in the natural state, i.e., the overall volume of subterranean water found in pores and fissures in water-bearing rock. Static reserves may be extracted from the stratum only when it is drained.

2. Elastic reserves may be extracted from the stratum by reducing hydrostatic pressure which causes of both the water (when the pressure is reduced water expands) and the water-bearing rock (rock becomes more dense and the water is squeezed off).

3. Dynamic reserves ( resources) are the waters in natural circulation. Dynamic reserves are usually exploited simultaneously with elastic reserves when hydrostatic pressure in the reservoirs drops.

Exploitable reserves of subsurface waters (including geothermal) consist of subsurface water that can be extracted from wells and other installations in a technically and economically rational fashion, under the given conditions of exploitation that maintain optimal quality and quantity. Such exploitable reserves may not be limited to elastic and dynamic reserves in the exploited water-bearing horizons. During extensive withdrawal of subsurface water, changes occur in the water budget of the water-bearing unit. Due to the fact that a cone of depression forms during the exploitation of a geothermal water field, conditions are created for drawing additional water resources into the exploited area that were not taken into account when the natural conditions were evaluated.

Examples of the additional reserves of geothermal thermal water that can form in a geothermal water field include leakage from neighboring water-bearing strata, and concentrated supplementary feeding through high-permeability rock that allows improved recharge -- so called lythologic windows.

Geothermal Resources in Russia & Ukraine — BL&A page 17 The exploitable reserves represented by the following equation;

Q e = Q el + Q dyn + Q add

where:

Q e are exploitable reserves; Q el + Q dyn , elastic and dynamic reserves; and 3 Q add , the reserves that are added during exploitation.

In the Russian Federation, geothermal water resources are subdivided into four categories – C2 , C1, B, and A – ranked by increasing degree of exploration, research on water quantity, quality, and exploitation conditions. When a regional estimate of the exploitable reserves of geothermal water is prepared, the so-called hypothetical exploitable resources are also determined. This term indicates a level of knowledge that is below the C2 category.

In addition, exploitable reserves of thermal water are further subdivided into 2 groups, with respect to their current economic value:

a. Reserves that can now be exploited economically, and which satisfy both the intended use and the proposed system of exploitation;

b. Reserves that are presently uneconomical due to the small volume of water for the intended purpose, or because they require extremely complex methods of exploitation; viewed as potentially exploitable in the future.

Classification is overseen by GKZ -- the State Commission for Resources, which examines and approves for development all mineral, oil, gas, and subsurface water resources. The Commission is under the jurisdiction of the Council of Ministers of the Russian Federation.

3 During exploitation static reserves are not extracted.

Geothermal Resources in Russia & Ukraine — BL&A page 18 The following table gives the definitions of the categories used by the GZJ:

Classification of Exploitable Thermal Water Reserves on the Basis of Level of Study

Category of Characterization of Level of Study Type of Reserves Reserves

A Reserves have been explored and studied to the degree that the Commercial data assure complete understanding of stratigraphy, structure, pressure heads, and permeability of water-bearing rock. The means by which water-bearing formations are replenished and their potential to add to exploitable reserves have been ascertained. The volume of subsurface water has been determined with a certainty that assures the useful life and the potential for a desired purpose. Exploitable reserves of subsurface water have been determined at the water supply site using pump (flowing) tests and/or other means. B Reserves have been explored and studied in detail. The data Commercial obtained assure determination of basic stratigraphic features, structure, and recharge sources for replenishing exploitable resources of subsurface water. Water quality has been studied to the point where its use may be established. Exploitable reserves of subsurface water at a site of projected supply have been determined on the basis of pump (flowing) tests and extrapolated estimates.

C1 Reserves have been explored and studied to the point where the Potential data assure general determination of the structure, stratigraphy, and extent of water-bearing formations. Exploitable reserves are determined by sampling data from single exploratory wells, and through analogy with well-known fields.

C2 Reserves have been established on the basis of geologic and Potential hydrothemal data, and have been confirmed by sampling of water-bearing formations at specific locations, or by analogy with other explored areas.

Geothermal Resources in Russia & Ukraine — BL&A page 19

Table 5

Geothermal Resources of Crimea4

Water-bearing Mineraliz- Stratum Water Flow rate at Name of Drilling Location horizon depth ation of pressure in temperature borehole in Site in water in MPa at bedding m3/day m g/l 0C Novoselovskoe - consists of three Crimea 700 - 1500 2-3 to 35 0.3 - 1.22 47 - 75(80) 690 - 2300 parts: - Ilinka - Trudovoe - Sizovka Severo-Sivashkoe Crimea 1350 - 1750 26 - 32 0.4 - 0.8 52 - 74 1400

All of the above described resources are in a state of conservation as of the end of 1994.

4 As described by Burgazgeoterm of the Russian hydrogeological department (Head of Dept. Postnikov) Table 6

Some Examples of Geothermal Prospective Drillings in the Ciscarpathian Region5

2 3 Location Hydro- Depth of Flow-rate ÄT1 ÄT2 geothermal temperature in in in complex measurement, m3/day 0C 0C m Uzgorod - 1T Paleozoic 1900 300 - 500 50.5 88.6 Uzgorod - 2T Early Miocene 1350 46.8 -- 76.15 Uzgorod - 2T Early Miocene 1700 12.4 -- 90.8 Uzgorod - 2T Early Miocene 1940 214 -- 97.6 Uzgorod - 2T Early Miocene 1820 79.3 -- 92.7 Uzgorod - 2T Early Miocene -- 138 - 273 -- -- Uzgorod - 4T Early Sarmat 1300 43 -- 72.2 Uzgorod - 5T Paleozoic 1012 40 - 90 -- 65 Tereblia - 6 Tuffs 2350 500 - 900 86.5 96.5 Irshava -2 Cretaceous 3200 115 -- 136.3 Beregovo 2T Early Sarmat -- 346 - 691 44.5 --

5 As per A.A. Andrusenko et al.